Kent Smetters may have achieved the Holy Grail for advisors who care about clients: a service called Veritat that provides personalized advice to a broad swath of underserved clients using an effective technology platform that boasts a Wharton pedigree for the investing sleeve of this fiduciary advice model. Oh, and the advisor can get paid for providing advice.
The financial planning process can leave a lot of people cold, investors and their financial advisors among them. Clients may not be receiving appropriate planning advice and their expenses may seem too high. Advisors have the challenge of offering proper investment guidance while managing a business and earning a living. Brokerage firms, to stay profitable, must see to it that their advisors are sufficiently productive while ensuring that clients are happy and that all regulations are complied with.
These conflicting concerns are not always easy to harmonize, and Wall Street is littered with attempts to build a better mousetrap. Yet attempts to lower costs by automating financial planning and providing it online can be problematic since studies have shown that the relationship with the advisor may be the most critical element in helping investors stay the course to achieve their goals.
Along comes the aforementioned Mr. Smetters, a Wharton Professor of Business who has devised a unique advisory model that aims to greatly change the way advisors do business, solving all these problems, and pleasing advisors and investors alike. Smetters proposes to enable financial advisors to do the kind of work that motivated many to get into the business in the first place–that is, help clients properly plan their finances–while helping advisors earn a good living and ridding them of the headaches of running a business.
“A growing number of advisors hope to adopt a fiduciary standard but usually face substantial overhead for getting their job done. So we recently opened up Veritat to allow independent advisors to directly join our RIA,” said Smetters (left) in an interview with AdvisorOne. The new advisory firm whose Latin name means “truth,” has been operating in stealth mode since 2009, but marks its fully built-out platform with the launch on Monday of its new advisor-facing website. The Veritat network currently has several dozen advisors either in its network or at some point in the firm’s evaluation process. With its revamped site, the firm aims to recruit 25-35 financial advisors per month onto its fully automated, advisor-friendly platform.
“Veritat handles all the heavy lifting. We even do the scheduling, collection of client information, creation of the personalized plans and the portfolio management,” Smetters says. “So our advisors increase their book straight away and focus on what they tell us they enjoy most–building personal relationships and offering advice.”
To make the headaches go away and enable advisors to enjoy financial planning bliss, Veritat takes what Smetters calls a “Turbo Tax approach” to financial planning. The clients themselves input the data online, prompted by user-friendly guidance from Veritat’s website. Veritat’s model generates a plan, which is transmitted to the advisor, who approves the plan before it is transmitted to the client portal.
“The advisor … can look at it and see if they want to make changes. The advisor has some dial control” Smetters says. “They can say ‘Maybe I want to take a little more risk.’
“Over 90% of the time they agree with our plan,” he adds. “We don’t let them dial up like crazy.”
Veritat also seeks to help clients on the marketing side and says it is different from other models like Garrett Planning Network that are uninvolved with the execution or substance of the financial advice offered.
“We’re not just an association. We really are an RIA and a full platform for actually executing,” Smetters says. “Our advisors get access to the entire platform. We gather all the client information. All the advisors get their own website … we create a community.”
Smetters says the online platform makes it convenient for advisors–including wirehouse and independent advisors–to focus on building their book and minimize their costs, even operating out of their homes if they wish. Working mothers in particular should find this model appealing, he says.
“Of the 65,000 CFPs, 25% are females raising families,” Smetters says. “They essentially exit the workforce. They can use the webinar format to meet with clients.”
And younger advisors looking to get started amid the high hurdles of forming an RIA and doing paper-based work with heavy compliance burdens may find Veritat, which prefers its advisors to have a CFP or other planning credential, an easy entrée into financial planning.